In a sweeping move to reduce labor costs, German automaker Volkswagen is set to eliminate 35,000 jobs in Germany by 2030. The layoffs are part of a broader cost-cutting initiative influenced by the uncertainty of Trump-era tariffs on German automotive exports to the United States and continued pressure from global competition.
According to German news outlet Bild, over 20,000 employees have already agreed to early retirement, with the cuts focused mainly on the automaker’s plants across Germany.
Generous Severance Package and Job Cut Strategy
Volkswagen is reportedly offering a severance package of up to $400,000, depending on the employee’s tenure. While the automaker has not officially disclosed the total payout, sources from a staff meeting at the Wolfsburg headquarters confirmed the offer aims to ensure a “socially acceptable” transition for impacted employees.
Additionally, the company will reduce apprenticeships from 1,400 to 600 starting in 2026, further trimming operational expenses.
Cost Savings and Salary Freeze
The layoffs and apprenticeship cuts are expected to help Volkswagen save nearly €1.5 billion annually. As part of the broader financial overhaul, around 130,000 employees have agreed to a salary freeze, with a planned 5% raise deferred into a fund that supports flexible working time models.
These measures were reportedly key to avoiding plant closures in Germany, a critical concern amid increasing financial and geopolitical strain.
Tariff and Market Pressures Mount
Volkswagen’s cost-cutting move comes amid mounting pressure from Trump-era tariffs, which continue to threaten Germany’s auto exports. According to the Ifo Institute, business sentiment in the German automotive sector hit a low in May 2025, with the business climate index dropping to -31.8.
Ifo’s analyst Anita Woelfl emphasized that uncertainty around U.S. trade policy is causing widespread disruption. Major German automakers, including Volkswagen, BMW, and Mercedes-Benz, are reportedly in talks with U.S. authorities to find relief from these trade tensions.
Conclusion
As the German auto industry navigates economic headwinds and policy uncertainties, Volkswagen’s cost-cutting strategy—including significant layoffs and operational changes—signals a deep transformation aimed at long-term survival. The outcome of tariff negotiations and the company’s ability to manage workforce transitions will be pivotal in shaping its future trajectory.
